1. FEMA Overview February 2016 Vijay Gupta ACMA, FCS, FCA Mobile: 9810083373 vijay.gupta@vkgnassociates.com

2. Abstract from Lecture delivered by Mr. Justice S H Kapadia, Hon’ble Chief Justice of India on 20 th February 2010 at ITAT Conference Start: “But friends, let me tell you about whatever I have learnt; in fact I became a judge precisely because I was very keen to have a learning process. I always realized that this is a position where if a judge sits with an open mind and with clarity of thought, he will understand and he will learn in the process and I can tell you from experience that each day, in whatever jurisdiction you sit, it’s a learning process and there I may say that be judges or members of the Tribunal, we are all enjoying a reflected glory of the advocates who have contributed to a large extent in the development of tax law.” End: “I always believe that instead of going into theories and principles, etc., it is better that we share experience in such workshops and seminars. And last thing I would like to say is, please do not put an end to the efforts here. It is a continuing process.”

3. Foreign Exchange Management Act, 1999 Sec.1-2 Short title, Definitions Sec. 3-9 Regulation and management of FOREIGN EXCHANGE : 3Dealing in foreign exchange 4Holding of foreign exchange 5Current account transactions 6**Capital account transactions 7Export of goods and services 8Realisation and repatriation of foreign exchange 9Exemption from realisation and repatriation Sec.10-12 Authorised person Sec. 13-15 Contravention and penalties, power to compound contravention Sec. 16-35 Adjudication and appeal Sec. 36-38 Directorate of enforcement Sec. 39-45Miscellaneous 46, 47 Power to make Rules; Power to make Regulations 48, 49 Rules/Regulations laid before Parliament*; Repeal & Savings **Control on non-debt capital flows as equity will be exercised by the Government. Central Government makes Rules; RBI makes Regulations For a total period of thirty days in one or more successive sessions. Both Houses must either agree or disagree. 3

4. Current Account Transactions Sec 5 Any person may sell or draw foreign exchange to or from an authorised person if such sale or drawal is a current account transaction : Provided that the Central Government may, in public interest and in consultation with the Reserve Bank, impose such reasonable restrictions for current account transactions as may be prescribed. Drawal of foreign exchange includes use of International Credit Cards (ICC), International Debit Cards (IDC), ATM cards, etc. Any transaction which is not a capital account transaction and includes: Payment due in connection with current business, trade, services, short term borrowings & credit facilities in normal course of business Payment of interest on loans Income/Dividend on investment Remittance of living expenses to parents/spouse/children Expenses in connection with foreign travel, education, medical etc. No ceiling for Export Commission. However, for export benefits like Duty Drawback, DEPB, etc., agency commission is permissible up to 12.50%. 4

5. 5 FEM (Current Account Transactions) Rules, 2000 Schedule I Foreign exchange withdrawal is prohibited Examples Lottery winnings Racing/riding etc. Purchase of lottery tickets, banned /prescribed magazines, football pools, sweepstakes etc. C ommission towards equity investment in JVs/ WoS abroad of Indian companies Call Back Services of telephones etc. Schedule II Ministry/Department of Central Government approval required Examples Cultural Tours (Ministry of Human Resources Development) Hiring charges of transponders (Ministry of I&B) etc. Schedule III RBI approval required Examples Private visits abroad) Gifts, Donations Going abroad for employment Maintenance of close relatives abroad Business travel Medical treatment abroad Consultancy services Reimbursement of pre- incorporation expenses

6. Capital Account Transactions…1/2 Any transaction: which alters the assets or liabilities outside India of persons resident in India or which alters assets or liabilities in India of persons resident outside India Including transactions referred to in section 6(3) of FEMA 6

7. Capital Account Transactions…2/2 7 Section 6(3) RBI in consultation with Central Govt. may by regulations, prohibit, restrict or regulate: Transfer or issue of any  foreign security by a person resident in India  security by a person resident outside India  security or foreign security by any branch, office or agency in India of a person resident outside India Any borrowing or lending in foreign exchange Any borrowing or lending in rupees between a person resident in India and a person resident outside India Deposits between person resident in Indian and person resident outside India Export, import or holding of currency or currency notes Acquisition and transfer of immovable property other than a lease not exceeding five years  outside India by a person resident in India  in India by a person resident outside India Giving a guarantee or surety in respect of any debt, obligation or other liability incurred  by a person resident in India and owed to a person resident outside India  by a person resident outside India

8. What is the mandate of the RBI/ADs? § Regulations: RBI is empowered to “Notify” regulations to give effect the FEMA – this constitutes delegated legislation § A.P. (Dir. Series) Circular: Contain procedural instruction issued by the RBI (issued under section 10(4) and Section 11 of FEMA) § Master Directions : Consolidated Directions have been issued by RBI on 01 January 2016, consolidating all instructions issued by the RBI except on Inbound Investment. § Instructions to ADs have been compiled in the Master Direction. § List of underlying circulars/ notifications which form the basis of this Master Direction furnished in the Appendix. § Reporting instructions are given in Master Directions on reporting (Master Direction No. 18 dated January 01, 2016) Authorized Dealer : RBI’s gatekeepers – Permitted to deal in foreign exchange under FEMA – FEMA requires all capital account and current account transactions to be routed through the Authorized Dealers (ADs) – ADs are regulated by the RBI and must comply with all RBI rules, regulations and instruction

9. Rules under FEMA (6) 1. FEM (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000 2. FEM (Authentication of Documents) Rules, 2000 3.FEM (Adjudication Proceedings and Appeals) Rules, 2000 4.FEM (Current Account Transactions) Rules, 2000 5.FEM (Compounding proceedings) Rules, 2000 6.Appellate Tribunal for Foreign Exchange (Recruitment, Salary & Allowances & Other Conditions of Service of Chairperson & Members) Rules, 2000

10. Regulations under FEMA (26) 1.FEMA 1/2000 - FEM (Permissible Capital Account Transactions) Regulations, 2000 Permissible Capital Account Transactions 2.FEMA 2/2000 - FEM (Issue of Security in India by a branch, office or a person resident outside India) Regulations, 2000 Transfer or issue of any security or foreign security by any branch, office or agency in India of a person resident outside India 3.FEMA 3/2000 - FEM (Borrowing or Lending in Foreign Exchange) Regulations, 2000 Any borrowing or lending in foreign exchange in whatever form or by whatever name called 4.FEMA 4/2000 - FEM (Borrowing and Lending in Rupees) Regulations, 2000 Any borrowing or lending in rupees in whatever form or by whatever name called between a person resident in India and a person resident outside India 5.FEMA 5/2000 - FEM (Deposit) Regulations, 2000 Deposits between persons resident in India and persons resident outside India 6.FEMA 6(R)/2015 - FEM (Export & Import of Currency) Regulations, 2015 Export, import or holding of currency or currency notes 7.FEMA 7(R)/2015 - FEM (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015 Transfer of immovable property outside India, other than a lease not exceeding five years, by a person resident in India

11. Regulations under FEMA (26) 8.FEMA 8/2000 - FEM (Guarantees) Regulations, 2000 Giving of a guarantee or surety in respect of any debt, obligation or other liability incurred - (i)by a person resident in India and owed to a person resident outside India (ii)by a person resident outside India 9.FEMA 9(R)/2015 - FEM (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015 Realisation, Repatriation and Surrender of Foreign Exchange 10.FEMA 10(R)/2015 - FEM (Foreign currency accounts by a person resident in India) Regulations, 2015 Foreign Currency Accounts by a Person Resident in India 11.FEMA 10A/2014 - FEM (Crystallization of Inoperative Foreign Currency Deposits) Regulations, 2014 12. FEMA 11(R)/2015 - FEM (Possession and retention of foreign currency) Regulation, 2015 Possession and retention of Foreign Currency 13.FEMA 12(R)/2015 - FEM (Insurance) Regulations, 2015 Insurance 14.FEMA 13/2000 - FEM (Remittance of Assets) Regulations, 2000 Remittance of Assets 15.FEMA 14/2000 - FEM (Manner of Receipt & Payment) Regulations, 2000 Manner of Receipt and Payment 16.FEMA 20/2000 - FEM (Transfer or Issue of Security by a Person resident Outside India) Regulations, 2000 Transfer or issue of any security by a person resident outside India

12. Regulations under FEMA (26) 17.FEMA 21/2000 - FEM (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 Acquisition or transfer of immovable property in India, other than a lease not exceeding five years, by a person resident outside India 18.FEMA 22/2000 - FEM (Establishment in India of Branch or Office or Other Place of Business) Regulations, 2000 Establishment in India of Branch or Office or other place of business 19.FEMA 23(R)/2015 - FEM (Export of Goods and Services) Regulations, 2015 Export of Goods and Services 20.FEMA 24/2000 - FEM (Investment in Firm or Proprietary Concern in India) Regulations, 2000 Investment in Firm or Proprietary Concern in India 21. FEMA 25/2000 - FEM (Foreign Exchange Derivative Contracts) Regulations, 2000 Foreign Exchange Derivative Contracts 22. FEMA 120/2004 - FEM (Transfer or Issue of any Foreign Security) Regulations, 2004 Transfer or issue of any Foreign Security 23.FEMA 348/2015-Foreign Exchange Management (Regularization of assets held abroad by a person resident in India) Regulations, 2015 24.FEMA 71/2002 - FEM (Offshore Banking Unit) Regulations, 2002 25.FEMA 101/2003 - FEM (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003 Withdrawal of General Permission to OCBs 26.FEMA 339/2015 – FEM (International Financial Services Centre) Regulations, 2015

13. Comprehensive Master Directions Foreign Exchange Management Act was enacted in 1999 with 25 original notifications came into force with effect from June 1, 2000. Over the years the regulations framed under FEMA have had over 330 amendments. Keeping in view the objective of promoting ease of doing business, a need was felt to consolidate the regulations and rationalise them in the light of evolving business environment and changing practices in cross-border transactions relating to external trade and payments. 17 Master Directions issued on 04 January 2016 - Consolidated relevant A.P (DIR Series) Circulars issued so far All master regulations will be fully updated and placed online. Reserve Bank will issue Master Directions on all regulatory matters. The Master Directions to be issued will consolidate instructions on rules and regulations framed by the Reserve Bank under various Acts including banking issues and foreign exchange transactions. The process of issuing Master Directions involves issuing one Master Direction for each subject matter covering all instructions on that subject. Any change in the rules, regulation or policy will be communicated during the year by way of circulars. The Master Directions will be updated suitably and simultaneously whenever there is a change in the rules/regulations or there is a change in the policy. All the changes will get reflected in the Master Directions available on the RBI website along with the dates on which changes are made. Explanations of rules and regulations will be issued by way of Frequently Asked Questions (FAQs) after issue of the Master Directions in easy to understand language wherever necessary. The existing set of Master Circulars issued on various subjects will stand withdrawn with the issue of the Master Direction on the subject. 13

14. Master Directions - 01 January 2016 + Updated thereafter also Foreign Investment in India updated 30.10.2015 (Master Circular) Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers Acquisition and Transfer of Immovable Property under Foreign Exchange Management Act, 1999 updated 04.02.2016 Establishment of Liaison/ Branch/ Project Offices in India by Foreign Entities Export of Goods and Services Import of Goods and Services Compounding of Contraventions under FEMA, 1999 Guarantees & Co-acceptances Money Changing Activities Opening and Maintenance of Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses Miscellaneous Reporting under Foreign Exchange Management Act, 1999 Deposits and Accounts updated 04.02.2016 Remittance of Assets Insurance Other Remittance Facilities Liberalised Remittance Scheme (LRS) Borrowing and Lending transactions in Indian Rupee between Persons Resident in India and Non-Resident Indians/ Persons of Indian Origin 14

15. FDI Policy Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 FEMA 20 Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Government of India (DIPP) Circular on Consolidated FDI Policy (last updated on May 12, 2015) RBI Master Circular on Foreign Investments in India dated 01 July 2015 (updated on 16 July 2015) RBI FAQs - Foreign Investments in India 10.02.2015 FIPB Review books 2014, 2011-2013; 2010; 2009; 2008; FAQs by FIPB for eFiling Annual Return on Foreign Liabilities and Assets (FLA return) 18 June 2014 – for LLP also FDI inflows - FIPB/SIA; Acquisition of Existing Shares; & Automatic Route of RBI: Website of DIPP.nic.in In case of any conflict between FDI Circular and FEMA Regulations, the relevant FEMA Notification will prevail. The procedural instructions are issued by the Reserve Bank of India vide A.P.Dir. (Series) circulars

16. Frequently Asked questions (FAQs) by RBI Foreign Investments in India 10.02.2015 Liaison / Branch / Project Offices of foreign entities in India 07.07.2015 Acquisition and Transfer of Immovable Property in India by a person resident outside India 02.07.2012 Facilities for Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) 19.09.2014 Features of various Deposit Schemes available to Non-Resident Indians (NRIs) 02.02.2015 Account Opened by Foreign Nationals and Foreign Tourists 14.08.2014 Forex Facilities including the Liberalised Remittance Scheme (LRS) for Residents 17.07.2015 Compounding of Contraventions under FEMA, 1999 27.03.2015 Exchange Earner's Foreign Currency (EEFC) Account 09.10.2012 Annual Return on Foreign Liabilities and Assets (FLA return) under FEMA 1999 03.07.2013 Direct Investment by Residents in Joint Venture (JV)-Wholly Owned Subsidiaries (WOS) abroad 13.10.2015 Scheme for Authorized Dealers Category I (AD) banks, Authorized Dealers Category-II and Full Fledged Money Changers Appointing Agents/Franchisees for Undertaking Restricted Money Changing 24.03.2015 Hedging of Price Risk in Commodities 04.07.2014 Asian Clearing Union 23.10.2013 Swap Window for attracting FCNR (B) Dollar funds 16

17. Dealing in foreign exchange, etc. Sec 3 Save as otherwise provided in this Act, rules or regulations made there under, or with the general or special permission of the Reserve Bank, no person shall- a. Deal in or transfer any foreign exchange or foreign security to any person not being an authorized person ; b. Make any payment to or for the credit of any person resident outside India in any manner ; c. Receive otherwise through an authorized person, any payment by order or on behalf of any person resident outside India in any manner ; Explanation - For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorized person) without a corresponding inward remittance from any place outside India, then, such person shall be deemed to have received such payment otherwise than through an authorized person; d. enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person. Explanation - For the purpose of this clause, "financial transaction" means making any payment to, or for the credit of any person, or receiving any payment for, by order or on behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or transferring any security or acknowledging any debt.

18. Definitions..1/3  “ Currency " includes all currency notes, postal notes, postal orders, money orders, cheques, drafts, travelers cheques, letters of credit, bills of exchange and promissory notes, credit cards or such other similar instruments, as may be notified by the Reserve Bank  “ Currency Notes " means and includes cash in the form of coins and bank notes.  “ Foreign Currency " means any currency other than Indian currency.  “ Foreign Exchange " means foreign currency and includes,-  deposits, credits and balances payable in any foreign currency,  drafts, travelers cheques, letters of credit or bills of exchange, expressed or drawn in Indian currency but payable in any foreign currency,  drafts, travelers cheques, letters of credit or bills of exchange drawn by banks, institutions or persons outside India, but payable in Indian currency  “ Foreign Security " means any security, in the form of shares, stocks, bonds, debentures or any other instrument denominated or expressed in foreign currency and includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividends is payable in Indian currency

19. Definitions..2/3 “ Person " includes-  individual,  a Hindu undivided family,  a company,  a firm,  an association of persons or a body of individuals, whether incorporated or not,  every artificial juridical person, not falling within any of the preceding sub-clauses, and  any agency, office or branch owned or controlled by such person.

20. Definitions..3/3 “ Security " means shares, stocks, bonds and debentures, Government securities as defined in the Public Debt Act, 1944 (18 of 1944), savings certificates to which the Government Savings Certificates Act, 1959 (46 of 1959) applies, deposit receipts in respect of deposits of securities and units of the Unit Trust of India established under sub-section (1) of section 3 of the Unit Trust of India Act, 1963 (52 of 1963) or of any mutual fund and includes certificates of title to securities, but does not include bills of exchange or promissory notes other than Government promissory notes or any other instruments which may be notified by the Reserve Bank as security for the purposes of this Act “ Service " means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, medical assistance, legal assistance, chit fund, real estate, transport, processing, supply of electrical or other energy, boarding or lodging or both, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service “ Transfer ” includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien [Section 2(ze) of FEMA]. Thus, the definition is very wide. It covers not only transfers of ownership but also simple transfer of possession or even lien.

21. General Principles Residential status under Income-tax Act Resident Resident and Ordinarily Resident (ROR) Resident but Not Ordinarily Resident (NOR) Non Resident (NR) Residency is determined by physical number of days stay in India

22. Residential Status……Cont’d Basic conditions: 182 days or more in a financial year 60 days* or more in a financial year plus 365 days or more in four financial years preceding the relevant financial year ROR / NOR *60 days gets substituted for 182 days only in the year of departure for an Indian citizen proceeding abroad for the purpose of employment. In the year of arrival to India for resuming employment, the threshold limit is 60 days NR Any one of the two conditions satisfied None of the conditions satisfied

23. Residential Status……Cont’d Additional conditions: “Resident” in India in at least two out of ten financial years preceding the relevant financial year; and Present in India for 730 days or more during the 7 financial year preceding the relevant financial year ROR Generally an expatriate/NR coming to India for the time will qualify as ROR in 2 or 3 Years NOR Both the conditions satisfied One or none of the conditions satisfied

24. Definition of Person resident in India under FEMA...1/2 A person residing in India for > 182 days during the preceding financial year A person who has gone out of India or who stays outside India, in either case  taking up employment outside India, or  carrying on outside India a business or vocation outside India, or  any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period A person who has come to or stays in India, in either case, otherwise than  taking up employment in India, or  carrying on in India a business or vocation in India, or  any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period To be treated as a person resident in India, a person has not only to satisfy the condition of the period of stay (being more than 182 days during the preceding financial year) but has to also comply with the condition of the purpose/ intention of stay. Student going abroad for studies is treated as Non-Resident Indian (NRI) and is eligible for all the facilities available to NRI under FEMA, 1999. If NRI returns to stay in India for an 'uncertain period' he will become a person resident in India and his NRE account should be redesignated as Resident's account (Case law Basant Kumar Sharma vs. Government of India dated February 7, 2013) The type of visa granted should clearly indicate the intention to stay in India for an uncertain period to determine his residential status in terms of section 2(v) FEMA, 1999. 1 1

25. 25 Definition of Person resident in India Under FEMA...2/2 Any person or body corporate registered or incorporated in India An office, branch or agency in India owned or controlled by a person resident outside India An office, branch or agency outside India owned or controlled by a person resident in India 2 2 3 3 4 4 “ Person resident outside India ” means a person who is not resident in India.

26. Definition of NRIs REGULATIONSDEFINITION FEM (Deposit) Regulations: Prohibition/restriction/regulation of deposits between persons resident in India and persons resident outside India NRI means a person resident outside India who is a citizen of India or is a person of Indian origin (PIO) FEM (Investment in Firm or Proprietary Concern in India) Regulations FEM (Transfer or Issue of Security by a Person Resident Outside India) Regulations ‘FEMA 20’ FEM (Borrowing and Lending In Rupees) Regulations FEM ( Remittance of Assets ) Regulations: Remittance outside India by a person whether resident in India or not, of assets in India NRI means a person resident outside India who is a citizen of India PIO is excluded

27. Definition of PIOs REGULATIONSDEFINITION FEM (Deposit) Regulations PIO means a citizen of any country other than Bangladesh or Pakistan if ( a ) he at any time held Indian passport or ( b ) he or either of his parents or any of his grandparents was a citizen of India or ( c ) the person is a spouse of an Indian citizen or a person referred to in sub-clause ( a ) or ( b ) FEM (Remittance of Assets) Regulations FEM (Borrowing and Lending In Rupees) Regulations FEM (Investment in Firm or Proprietary Concern in India) Regulations PIO means a citizen of any country other than Bangladesh or Pakistan or Sri Lanka, if ( a ) he at any time held Indian passport or ( b ) he or either of his parents or any of his grandparents was a citizen of India or ( c ) the person is a spouse of an Indian citizen or a person referred to in sub-clause ( a ) or ( b ) FEM (Acquisition and Transfer of Immovable Property In India) Regulations PIO means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who ( a ) at any time, held Indian passport or ( b ) who or either of whose parents or whose grandparents was a citizen of India (c) the person is a spouse of an Indian citizen (Spouse is excluded)

28. Overseas Citizenship of India (OCI) Eligibility  A foreign national, who was eligible to become a citizen of India on 26.01.1950 or was a citizen of India on or at any time after 26.01.1950 or belonged to a territory that became part of India after 15.08.1947  Children (including minor) and grand children of above person  Citizens of Pakistan or Bangladesh are not eligible  Spouse of the eligible person can apply for OCI if he/she is eligible in his/her own capacity  PIO Cardholder can also apply for OCI provided he/she is otherwise eligible for grant of OCI like any other applicant Benefits to an OCI  Multiple entry multi-purpose lifelong visa for visiting India.  Exemption from registration with local police authority for any length of stay in India.  Parity with Non resident Indians (NRIs) in respect of economic, financial and educational fields except in relation to acquisition of agricultural or plantation properties.  No parity shall be allowed in the sphere of political rights.  Parity with NRIs in respect of pursuing the following professions in India, in pursuance of the provisions contained in the relevant Acts: Doctors, dentists, nurses & pharmacists; Advocates; Architects; Chartered accountants  Parity with NRIs to appear for the All India Pre-medical Test or such other tests to make them eligible for admission in pursuance of the provisions contained in the relevant Acts. Validity  An OCI is entitled to lifelong visa with free travel to India. Source: FAQs on Overseas Citizenship of India @ mha.nic.in

29. Close relative of an individual defined in Section 6 of Companies Act, 1956 / 2013 Members of a Hindu undivided familyHusband and wife Father (including step-father*)Mother (including step-mother) Son (including step-son)Son's wife Daughter (including step-daughter*) Father's father* Father's mother*Mother's mother* Mother's father*Son's son* Son's son's wife*Son's daughter* Son's daughter's husband* Daughter's husband Daughter's son*Daughter's son's wife* Daughter's daughter*Daughter's daughter's husband* Brother (including step-brothers) Brother's wife* Sister (including step-sister) Sister's husband* * Deleted/inserted in section 2(77) in Companies Act, 2013 This definition is different from what is defined as RELATIVE under the Income Tax Act, 1961: Sec 2(41): Definition of Relative Sec 13: Trust for charitable & religious purposes Sec 40A(2): Expenses/payments not deductible Sec 56(2): Gifts Sec 64(1): Clubbing of Income Sec 80DD: Medical treatment of a dependant who is a person with disability Sec 92A: Associated enterprise under transfer pricing

30. Change of residential status....1/2 Section 6(4) of FEMA Status changed to Person resident outside India A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if:  such currency, security or property was acquired, held or owned by such person when he was resident outside India OR  inherited from a person who was resident outside India Person resident in India Section 6(5) of FEMA Person resident outside India Status changed to Person resident in India A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if :  such currency, security or property was acquired, held or owned by such person when he was resident in India OR  inherited from a person who was resident in India

31.  Any fresh investments in India in shares or expansion of the activities of the companies in which investment is made would be subject to the prevailing sectoral FDI cap and conditionalities.  Further, sale proceeds of the assets would have to be deposited in the NRO Account and disposal thereof would be as per the applicable guidelines.  Section 6(4) of FEMA, 1999 covers the following transactions: (i) Foreign currency accounts opened and maintained by such a person when he was resident outside India ; (ii) Income earned through employment or business or vocation outside India taken up or commenced while such person was resident outside India, or from investments made while such person was resident outside India, or from gift or inheritance received while such a person was resident outside India; (iii) Foreign exchange including any income arising there from, and conversion or replacement or accrual to the same, held outside India by a person resident in India acquired by way of inheritance from a person resident outside India. (iv) A person resident in India may freely utilise all their eligible assets abroad as well as income on such assets or sale proceeds thereof received after their return to India for making any payments or to make any fresh investments abroad without approval of Reserve Bank, provided the cost of such investments and/or any subsequent payments received there for are met exclusively out of funds forming part of eligible assets held by them and the transaction is not in contravention to extant FEMA provisions. Change of residential status....2/2

32. Where to find the law - Reference/Sources Website of RBI : rbi.org.in for Master Circulars, FAQs, Circulars, Notification, Press Release, FEM Act ODI outflows : Monthly Press Release by RBI ECB/FCCB data under Automatic/Approval Routes : Monthly Press Release by RBI Website of DIPP : dipp.nic.in for Consolidated FDI Policy, Industrial Policy, Circulars, Press Notes/releases/Clarifications on FDI FDI inflows - FIPB/SIA; Acquisition of Existing Shares; & Automatic Route of RBI: Website of DIPP Website of FIPB : finmin.nic.in/fipbweb for FIPB related matters, eFiling Read Circulars, latest Master Directions, FAQs as Regulations may not be amended simultaneously by Notification. 32

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